What the Entertainment Industry Has in Store for 2025

Summary

WSJ What’s News: What the Entertainment Industry Has in Store for 2025

Release Date: December 31, 2024
Host: The Wall Street Journal

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Introduction

In the latest episode of WSJ's "What’s News," host Alex Osoloh delves into the multifaceted state of the entertainment industry as it approaches 2025. The discussion navigates through the challenges and triumphs of the past year, highlighting significant trends and forecasting what audiences and industry players can expect in the coming year.

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Retail and the Housing Market

The episode begins with an analysis of the U.S. retail landscape, particularly focusing on the correlation between the housing market and retail performance.

• Store Closures Outpace Openings:
  Alex Osoloh reports that in 2024, more U.S. retail stores closed than opened, reversing a two-year trend. Kate King, WSJ’s retail real estate expert, emphasizes, “Retailers that sell home furnishings and home improvement materials to Americans are certainly hurt by the housing slowdown” (00:36).

• Impact of Sluggish Housing on Retailers:
  Sarah Kraus explains, “If you aren't selling your home, it's probably likely that you aren't buying new windows or a new hardwood floor” (01:58). This slowdown affects retailers dependent on home sales, yet there are silver linings. Elevated home prices and decreasing inflation offer some respite, although a robust housing market remains crucial for retail growth (02:25).

• Retail Real Estate Remains Strong:
  Despite the increase in store closures, the retail real estate market remains resilient. Sarah Kraus highlights, “There are many retailers that are still expanding... retail vacancy is still quite low” (03:20). Rising rents and limited new construction have maintained high demand for available retail spaces.

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Power Outage in Puerto Rico and Chinese Chip Developments

The conversation briefly touches on significant events outside the entertainment sphere:

• Puerto Rico Power Outage:
  Over a million people in Puerto Rico are experiencing a power outage. Alex Osoloh notes, “Preliminary findings suggest a fault with an underground power line” (04:32). The restoration is expected within 24 to 48 hours.

• China’s Push for Domestic Chip Production:
  China is expanding its domestic chip production, with about 15% of chips used by Chinese automakers now being manufactured domestically—a number set to grow as the government supports local chip makers. This move coincides with the U.S. investigation into China’s chip production for sectors like automotive and defense (04:55).

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2024 Entertainment Industry Highlights

As the year wraps up, Kate King and Sarah Kraus reflect on the defining moments of 2024 in entertainment:

• Blockbuster Films and Streaming Hits:
  Theaters saw major releases such as “Inside Out 2,” “Deadpool,” and “Wolverine,” alongside successful streaming shows like “Bridgerton” and “Bluey” (06:37). The industry continues to recover from the disruptions caused by prolonged Hollywood strikes, returning to a more normalized release schedule.

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Taylor Swift’s Groundbreaking Eras Tour

A significant highlight of the year was Taylor Swift’s Eras Tour, which concluded with remarkable success:

• Tour Scale and Economic Impact:
  Sarah Kraus describes the tour as “the length and the scale... over 140 shows across 21 countries” (07:30). The tour not only generated an estimated $2 billion in revenue but also spurred economic activity in host cities, boosting spending in hotels and local businesses.

• Influence on the Music Industry:
  The tour has set a new benchmark, inspiring other artists to embark on extensive touring schedules. However, Sarah Kraus notes that replicating Swift’s success is challenging due to her unique blend of talent, extensive catalog, and fanbase loyalty (08:27).

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Streaming Trends and the Rise of Appointment Television

The discussion shifts to evolving consumption patterns in streaming:

• Live Programming and Advertising:
  Streamers are increasingly investing in live programming to attract advertisers. Sarah Kraus states, “When you can bring a lot of eyeballs together around one cultural or sporting event, that's good news for your ad business” (09:48). This strategy includes introducing ad-supported service tiers to retain customers by offering lower-cost options.

• Live Sports Integration:
  Live sports remain a vital component of streaming platforms. Amazon’s acquisition of NBA rights is poised to disrupt traditional broadcasting, ensuring that sports remain a key draw for streaming services (09:48).

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Future Trends for Entertainment in 2025

Looking ahead, several trends are anticipated to shape the entertainment landscape:

• Rise of Podcasts:
  Sarah Kraus predicts continued growth in podcasting, especially following its influential role in the 2024 presidential election. The dynamics within the podcast space will evolve, with prominent figures like Joe Rogan and emerging voices shaping the medium (11:10).

• YouTube’s Growing Dominance:
  YouTube is rapidly ascending as a primary entertainment platform, rivaling traditional TV and streaming services. Sarah Kraus observes, “YouTube is number two after Disney” in terms of TV time share among streamers, highlighting its increasing popularity across diverse age groups (11:10). The platform's blend of user-generated and professional content continues to attract substantial viewership.

• Convergence of Content Platforms:
  The lines between different content forms are blurring, with platforms like YouTube gaining acceptance within mainstream entertainment circles. Sarah Kraus notes, “There’s this sort of convergence theme... viewers are spending more time with it” (11:10).

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Conclusion

As 2024 concludes, the entertainment industry stands at a crossroads of innovation and recovery. The enduring impact of live performances, the strategic evolution of streaming services, and the burgeoning influence of digital platforms like YouTube and podcasts are set to drive the industry forward into 2025. WSJ's "What’s News" provides a comprehensive overview of these developments, offering insights essential for stakeholders and audiences alike.

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Notable Quotes with Timestamps

• Kate King: “Retailers that sell home furnishings and home improvement materials to Americans are certainly hurt by the housing slowdown.” (01:58)

• Sarah Kraus: “If you aren't selling your home, it's probably likely that you aren't buying new windows or a new hardwood floor.” (01:58)

• Kate King: “Does that change the outlook at all for [retailers]?” (02:29)

• Sarah Kraus: “Retail vacancy is still quite low. Rents are rising and a lot of retailers are happy that some stores are going out of because that means there is space for them to open new stores.” (03:24)

• Sarah Kraus: “ERAS was part of that ... this boom in everyone hitting the road to tour.” (07:30)

• Sarah Kraus: “YouTube is number two after Disney... it's very much worth watching that speaks directly to how people's preferences are changing.” (11:10)

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Produced by Pierre Biennma and supervised by Michael Kosmides.

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Timestamps Reference

• 00:36: Introduction to retail store closures.
• 01:58: Impact of housing market on home improvement retailers.
• 02:29: Outlook for retailers amidst sluggish housing market.
• 03:24: Retail real estate market strength.
• 04:32: Puerto Rico power outage details.
• 04:55: China's domestic chip production efforts.
• 06:37: 2024 entertainment industry highlights.
• 07:30: Taylor Swift’s Eras Tour impact.
• 08:27: Emulation of Taylor Swift’s touring model by other artists.
• 09:48: Streaming services’ strategies with live programming and sports.
• 11:10: Future trends in podcasts and YouTube’s dominance.

Transcript

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[Alex Osoloh]

Retailers in the US closed more stores.

[Kate King]

Than they opened in tomorrow 2024 but looking ahead, the news isn't all bad.

[Alex Osoloh]

For retail real estate.

[Sarah Kraus]

Even though there were more closures than openings among US retailers in 2024, the Retail Real estate landscape is still quite strong heading into the new year and.

[Alex Osoloh]

Most of Puerto Rico is without power, with a full fix 24 to 48.

[Kate King]

Hours away, plus what the entertainment industry may have in store for 2025.

[Alex Osoloh]

It's Tuesday, December 31st. I'm Alex Osoloh for the Wall Street Journal. This is today's edition of what's News, the top headlines and business stories. World Today Growth in US House prices dropped to its slowest pace in more than a year in October. The s & P CoreLogic case Shiller National Home Price Index, a closely watched benchmark out today, showed that home prices gained from a year earlier in October, but declined from the previous month. Even so, this year has been a slow one for home sales and that has ripple effects across the economy, including on retailers. Data firm Coresight Research announced that in 2024 more US stores closed than opened.

[Kate King]

Reversing a two year trend of net openings.

[Alex Osoloh]

And retailers who depend on Americans to buy things to fix up and furnish their homes were one of the biggest.

[Kate King]

Drivers of the contraction.

[Alex Osoloh]

Kate King covers retail real estate for the Wall Street Journal and tells us.

[Kate King]

More about what this trend means. Kate, what are some of the sectors affected by this sluggish housing market?

[Sarah Kraus]

Retailers that sell home furnishings and home improvement materials to Americans are certainly hurt by the housing slowdown. If you aren't selling your home, it's probably likely that you aren't buying new windows or a new hardwood floor to spruce everything up before you putting it on the market. At the same time, if you aren't buying a new house, then you probably aren't spending on those improvements that people usually make after purchasing a new home.

[Kate King]

As we saw in data out today, home prices are growing more slowly.

[Alex Osoloh]

How does that make things look for retailers moving forward?

[Kate King]

Does that change the outlook at all for them?

[Sarah Kraus]

Well, a still sluggish housing market definitely isn't helpful for retailers who sell items to people who are buying and selling their homes. But at the same time, there are some hopeful signs out there. Prices are still elevated and costs for retailers are still elevated, but inflation itself is slowing dramatically compared with prior years. And also, Americans, after kind of having this surge in spending on experiences in the past couple years after a long lockdown during the pandemic, are kind of going back to average spending patterns and the division between spending on items and spending on experiences. So that's good news for home retailers, but what they really need to see sales shoot up is for the housing market to pick up.

[Alex Osoloh]

How does the retail real estate market look more broadly?

[Sarah Kraus]

So even though there were more closures than openings among US retailers in 2024, the Retail Real estate landscape is still quite strong heading into the new year. There are many retailers that are still expanding and since there has been very little new construction of shopping centers and malls and other retail real estate in many years, there is high demand for available retail space. So retail vacancy is still quite low. Rents are rising and a lot of retailers are happy that some stores are going out of because that means there is space for them to open new stores.

[Alex Osoloh]

That was Wall Street Journal reporter Kate King. U.S. stocks are stabilizing after a rough couple of days, with major stock indexes mostly rising. In morning trading, The S&P 500 is up 24% this year. Through the end of trading yesterday, the dow has gained 13% and the Nasdaq has risen 30%.

[Kate King]

U.S. bond markets will close at 2:00pm.

[Alex Osoloh]

Eastern time today, but stocks will trade as normal.

[Kate King]

Both markets will be closed on New Year's Day.

[Alex Osoloh]

In other news, more than a million people in Puerto Rico are without power. Luma Energy, a Canadian American consortium that took charge of the island's electric grid in 2021, said on social media that the cause of the outage is under investigation, but preliminary findings suggest a fault with an underground power line. The company said that it could take up to two days to restore power, and Beijing is pushing to use Chinese made chips in its electric vehicles. People involved in the industry say that today about 15% of the chips used by Chinese carmakers are homemade, an increase from just a few years ago. It's poised to rise even further as the government sets targets and supports domestic chip makers. Last week, the US Opened an investigation into China's production of chips made with mature technology that are often used in such areas such as autos and defense. Coming up, from concerts to appointment television, what entertainment could have in store for the year to come. That's after the break.

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[Kate King]

2024 is drawing to a close, which.

[Alex Osoloh]

Means you've probably seen lists of the best TV and the best movies that came out this year.

[Kate King]

But in a year like this one.

[Alex Osoloh]

Those lists are not so easy to make since media and entertainment were increasingly.

[Kate King]

Fractured and specific to individuals tastes. But there were some unifying events and broader themes that could have a big impact on the entertainment business next year.

[Alex Osoloh]

And Wall Street Journal Los Angeles Bureau.

[Kate King]

Chief Sarah Kraus joins us now to discuss them. So Sarah, what defined 2024 in entertainment?

[Sarah Kraus]

It was a year of the rest of the era's tour, of course, Inside Out 2 and Deadpool and Wolverine are the two top theatrical movies of the year. You also have the sort of tried and true hits that continue to do really well on streaming the Bluey, the Grey's Anatomy, Netflix shows like Bridgerton or Baby Reindeer. One sort of macro theme in Hollywood this year was sort of the continued shakeout from the Hollywood strikes more than a year past the resolution of those, but it really had gummed up the works in terms of production, theatrical release and the like. So we're now just starting to enter a more normalized, you know, air quotes period of releases.

[Kate King]

I do want to talk about Taylor Swift's Eras tour. It ended earlier this month after five continents, 10 million tickets and revenue that could be about $2 billion. Some people in the music industry have said that this tour changes everything. So what about it was just so groundbreaking?

[Sarah Kraus]

First of all, start with the length of it and the scale. Overall you have 140 plus shows between March of 2023 and the end of this year, 21 countries, the number of shows and the vastness of the performance. To have a performer who's only 35 going through all the different stages of their pretty prolific career on stage, playing for three plus hours, having surprise nuggets and elements in the show that make every show distinct and the breadth of the shows, the length of the tour, the scale of the whole show really ended up Being an economic force in and of itself. In the cities where the ERAs tour went, there was increased spending on hotels, on friendship bracelets are everywhere you look these days. That tour helped fuel a real boom in live events that continues to this day. So ERAS was part of that. But really that's another trend, music industry wide, is this boom in everyone hitting the road to tour.

[Kate King]

In some ways, what you mentioned is so specific to Taylor Swift, right? Like the prolificness of her career and the length of it and all that stuff. I wonder if this is something the era's model is something that other artists are gonna try to emulate, especially as concerts become a bigger part of their revenue.

[Sarah Kraus]

It's an interesting question. I think that what that hinges on is who can actually get away with it in that way, Taylor Swift is so singular in her fame, in the body of work that she has, and how eclectic it is, and also in her ability to shape fans preferences. Not every megastar can do that. And honestly, even the list of megastars are quite small. So I think what you do see, partly spurred by this, is more artists hitting the road. And when I say that, really performers from musicians to comedians to podcasters, saying, hey, I can sell tickets to people who want to see me do what I do in recordings live. So that's absolutely a trend that has continued.

[Kate King]

You touched on the shared experience and how it's something that in the entertainment industry is finding renewed power. One of the places that it surprised me this year where we saw that was in streaming. We saw the return of appointment television, we saw live sports, we saw boxing matches that people went out of their way to watch. How, how are streamers finishing out 2024 and what kind of role does this appointment television play in their 2025 outlook?

[Sarah Kraus]

Streamers are leaning more into live programming and Netflix in particular. It's a big priority as it tries to build an advertising business. So when you can bring a lot of eyeballs together around one cultural or sporting event, that's good news for your ad business. Especially because this year, and to some extent the year before, more streamers launched ad supported tiers of service where you as a consumer can pay less if you agree to watch ads. And the streamer collects both your subscription revenue as well as ad revenue. So that's one of the macro themes, cutting across streaming. And that's important because streamers are trying to figure out how to keep customers longer. We've all reached to some degree, how many streaming services do I need? And so by giving people that trade off As a lower cost ad tier, it could be a tool that helps retain them. The other big streaming theme of this year was live sports. It is one of the few pieces of the cable TV ecosystem that remains healthy. It's been an anchor for a lot of people who haven't yet cut the cord and streamers want in on that action. They want to bring more live streamed sports to their platforms. And Amazon made a really disruptive play for NBA rights this year. That will change where those games are available for sure.

[Kate King]

I want to do a hard turn in our entertainment industry, zooming out a little bit and looking ahead into 2025. What are some of the trends for entertainment that you're keeping an eye on into the next year?

[Sarah Kraus]

Podcasts certainly played a huge role in the presidential election and I think really showed just how much media consumption has changed. Where people are turning for their news and entertainment, where they want to hear influential people talk to them. So the power of podcasting is definitely a high level theme that we're thinking about heading into the new year. Who the power players are in that, whether it be Rogan or the Theo Vaughn's of the world. So there continued to be an evolution of the winners and losers in the podcast space. So that's one theme. The other mega theme of this year that I'm certain will continue into next year is YouTube's dominance that across all the platforms that we follow, younger audiences have definitely flocked to YouTube. That is a primary source of entertainment for a lot of people young and old. So you've seen YouTube first top Netflix in terms of dabbing the greatest share of US TV time among streamers. But it's also creeping up on legacy entertainment companies. So when you think about all the way people consume TV, whether that's legacy TV streaming, et cetera, YouTube is number two after Disney. And I think that is a trend that is very much worth watching that speaks directly to how people's preferences are changing. There still is a bit of a divide we've seen over the last year. Some of the YouTube creators trying to get Emmy recognition and more sort of glossy Hollywood acceptance. And it's interesting to watch it ascend in terms of the time that viewers are spending with it sort of voting with their eyeballs, so to speak. So there's this sort of convergence theme that we think about as well. What was once the like scrappier user generated content has really turned into a full blown entertainment force that are many viewers first choice when they decide what to watch in entertainment.

[Kate King]

That was Wall Street Journal, Los Angeles Bureau Chief Sarah Kraus. And that's what's news for this Tuesday afternoon. Today's show was produced by Pierre Biennma.

[Alex Osoloh]

With supervising producer Michael Kosmides.

[Kate King]

I'm Alex Osala for the Wall Street Journal. We're off tomorrow for New Year's Day, but we'll be back to our normal schedule on Thursday. Thanks for listening.

[Alex Osoloh]

See you in 20.